Two companies came public this week as 2017 comes to a close, although both faced pushback on pricing and were forced to revise terms down. Commercial real estate brokerage and advisory firm Newmark Group raised $280 million (54% less than originally planned) and came to market at a discounted valuation relative to its closest peers. Casa Systems, a leading provider of CCAP products, raised $78 million (42% less than originally planned) and added insider buying.
The addition of Newmark and Casa brings the 2017 IPO market up to 158 deals, and we remain on pace to end the year at 160 (+52% from 2016).
| 2 IPOs During the Week of December 11th, 2017 | |||||
| Issuer Business |
Deal Size ($mm) |
Market Cap at IPO ($mm) |
Price vs. midpoint |
First day return |
Return at 12/15 |
| Casa Systems (CASA) |
$78 | $1,185 | -18.8% | +10.8% | +10.8% |
| Leading provider of CCAP products to broadband network operators. |
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| Newmark Group (NMRK) |
$280 | $3,192 | -31.7% | -0.4% | -0.4% |
| Commercial real estate brokerage and advisory firm carved out of BGC Partners. |
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Leading broadband cable vendor Casa Systems (CASA) raised $78 million by offering 6 million shares at $13, after slashing terms and adding insider buying (6% of the deal). The Andover, MA-based company originally planned to offer 8.4 million shares at $15 to $17. The stock ended the week up 11%. Casa expects to see a ramp-up in growth near-term, driven by a corresponding acceleration in cable box operator capex as a result of exploding bandwidth demand. However, actual results could differ materially given the uncertain timing around customer spending.
Carved out of BGC Partners, Newmark Group (NMRK) priced its $280 million IPO at $14, the low end of the downwardly revised range. The company originally planned to offer 30 million shares at $19 to $22. The stock traded down 0.4% on its first day. Although the company boasts industry-leading margins, 31% of LTM pretax income ($77 million) was a non-operating earnout from Nasdaq.
IPO Pipeline Update
VICI Properties (VICI), an entertainment REIT that manages properties on behalf of Caesar's Entertainment, filed for an IPO that we estimate could raise $1.0 billion, making it one of the largest deals in the pipeline.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is up 34.4% year-to-date, ahead of the S&P 500, which is up 19.5%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Square (SQ) and Ferrari (RACE). The Renaissance International IPO Index is up 29.3% year-to-date, while the ACWX is up 22.8%. Renaissance Capital’s International IPO ETF
